"Unfortunately, to date, Circuit City has failed to provide due diligence necessary to allow Blockbuster to make a definitive proposal. Blockbuster is making its proposal public because it believes the shareholders of Circuit City should have the opportunity to participate in determining the destiny of the company."

It said the offer is time-limited, but did not give a deadline. Blockbuster thinks Circuit City will enable it to build a hardware-content empire for video, after Apple's iPod-iTunes cash cow. Both firms have so far responded poorly to the challenges posed by internet retailers.

Last week, rumours flew that Blockbuster will soon announce its own set-top box.

The bid rates Circuit City at between $6 and $8 per share, an up to 67 per cent premium on its 15 February closing price. The combined company would be valued at $18bn.

The Blockbuster press release is here. Circuit City shares soared more than 50 per cent in pre-market trading today. ®